CREDIT INSURANCE question...
gabriellenlewis
Registered Posts: 129
A customer is overdue paying a company £86400. CI insures 80%. How much can be claimed, how much needs to be provisioned for and how much reclaimed VAT?
I would have though 0.2 x 86400 (£17280) = VAT
then 86400 - 17280 (£69120)
69120 x 0.8 (£55296) CI claim
69120 - 55296 (£13824) Provision
???
Apparently answers are:
CI claim £57600
provision £14400
VAT £14400
Pleases explain, thanks.
I would have though 0.2 x 86400 (£17280) = VAT
then 86400 - 17280 (£69120)
69120 x 0.8 (£55296) CI claim
69120 - 55296 (£13824) Provision
???
Apparently answers are:
CI claim £57600
provision £14400
VAT £14400
Pleases explain, thanks.
0
Comments
-
Hi there,
The question above does not specify if the amount 86,400 is VAT inclusive so I would assume it is to get the answers you have got. Sorry the pound sign doesn't work on my pc so I will be putting the figures without it.
86,400/1.2=72,000 in here you are taking out VAT. Remember that an insurance company will not pay the VAT. you have to claim the VAT back from HMRC.
86,400*0.8=57,600 this is the 80% that you are claiming back from the insurer
The total amount of 72,000 which is excluding VAT, minus the 57,600=14,400 this is the amount for provision.
VAT - this is the amount you will need to collect back from HMRC. There is a few ways to work this out but I like to do it the long way so:
Take the gross amount which 86400-57,600-14,400=14,400 this is the VAT amount you need to claim back.
I hope this is clear. Thank you.
0 -
> @Yalda20 said:
> Hi there,
>
> The question above does not specify if the amount 86,400 is VAT inclusive so I would assume it is to get the answers you have got. Sorry the pound sign doesn't work on my pc so I will be putting the figures without it.
>
> 86,400/1.2=72,000 in here you are taking out VAT. Remember that an insurance company will not pay the VAT. you have to claim the VAT back from HMRC.
>
> 86,400*0.8=57,600 this is the 80% that you are claiming back from the insurer
>
> The total amount of 72,000 which is excluding VAT, minus the 57,600=14,400 this is the amount for provision.
>
> VAT - this is the amount you will need to collect back from HMRC. There is a few ways to work this out but I like to do it the long way so:
>
> Take the gross amount which 86400-57,600-14,400=14,400 this is the VAT amount you need to claim back.
>
> I hope this is clear. Thank you.
Thank you! I actually realised my mistake after posting!0 -
great, when are you doing this exam?0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 321 NEW! Qualifications 2022
- 164 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 87 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 273 Tax
- 135 Bookkeeping
- 7.2K General accounting discussion
- 200 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership